The highlights from Monday’s SONAR reports. For more information on SONAR — the fastest freight-forecasting platform in the industry — or to request a demo, click here. Also, be sure to check out the latest SONAR update, TRAC — the freshest spot rate data in the industry.
Shipping demand continued to grow following a short-lived seasonal lull (albeit less of one than in 2021).
The Outbound Tender Volume Index (OTVI) increased 7% last week, with the number of rejected tenders falling roughly 1.5 percentage points to nearly 20%.
The good news is that capacity appears to be improving. The not-so-great news is that demand growth may hamper this recovery.
The one thing that will have to happen for significant easing is a demand-side reduction, which does not appear likely for the time being. Capacity cannot grow fast enough to account for what has been an unfathomable increase in consumer demand.
Shippers will need to pay close attention to regional fluctuations and get granular with their approach to find areas that are experiencing changes, because all regions are behaving independently at this point.
Lane to watch: Augusta (Maine) to Philadelphia
Overview: Winter storm pushes spot rates to peak season highs.
Highlights:
- Because of the major storm impacting the Northeast, spot rates pushed beyond peak season levels over the weekend. Rates hit $4.11 per mile with the rate sample being extremely varied with a large range.
- Augusta’s outbound rejection rate spiked above 60% to a 13-month high, while rejection rates to Philadelphia jumped over 30% leading into the weekend, but have since fallen back to 27%.
- Philadelphia’s outbound rejection rate moved little leading into the weekend and has been relatively stable throughout the past several months, hovering around 20%.
What does this mean for you?
Brokers: Look to Maine for any high value transactional freight to start the week. This lane is one of the more easily covered but has had upward rate pressure that started before the winter storm. Make sure you make this area the highest priority to start the week for any managed accounts.
Carriers: Accept more loads into New England as the winter storm has left a pile of rejected loads available on the spot market. The weather should be clear for a few days, giving you a window of opportunity to grab some high margin freight while servicing your inbound customers more effectively.
Shippers: Call your carriers to start the week to make sure you have a realistic plan in place to handle your freight demands in between weather systems. The spot market is as high as it has been, so increase lead times utilizing the weather forecast to optimize compliance.
Watch: Shipper Update
Lane to watch: Oklahoma City to Nashville (Tenn.)
Overview: Rates have hit the calm before the storm as spot rates come in similar to contract rates.
Highlights:
- Oklahoma City’s rejection rates dropped 5 basis points (bps) w/w, coming in at 10.56. This indicates spot rates and contract rates are relatively close to each other.
- Nashville has had a slight drop in both rejection rates and volumes; however capacity is still tight.
- FreightWaves TRAC rate shows $2.77 per mile and is expected to maintain that rate.
Brokers: Nashville had almost equal amounts of inbound and outbound loads last week, while rejection rates are still above 20. Raise your rates to ensure the capacity squeeze doesn’t get the best of you. Rates should be dropping in the Oklahoma City market as the week goes on.
Carriers: Winter weather is expected to hit the Midwest this week. While most of it will be north of OKC and Nashville, go to the high end of your rates to accommodate drivers who may get stuck later in the week.
Shippers: Take advantage of the shorter tender lead times and drops in rejection rates to get shipments moved with minimally inflated rates. Anything that can be shipped quickly on the spot market should be shipped soon so you can take advantage of the rates.
Watch: Carrier Update
Lane to watch: Cincinnati to Atlanta
Overview: Outbound tender rejections are likely to increase further in the days ahead as the Headhaul Index surged 30% w/w.
Highlights:
- Cincinnati outbound tender volumes are up 31% w/w, signaling that demand for outbound capacity is increasing.
- The Headhaul Index in Cincinnati is up 30% w/w, signaling that capacity is likely to tighten due to the growing imbalance between inbound and outbound volumes.
- Cincinnati outbound tender rejections are up 132 bps w/w, but are likely to increase further due to the growing imbalance between inbound and outbound volumes.
What does this mean for you?
Brokers: Cincinnati outbound tender rejections have increased 132 bps w/w, and are expected to climb further as the imbalance between inbound and outbound tender volumes grows. There has been a 30% increase w/w in the Headhaul Index, which is often a leading signal that capacity is likely to get tighter in the days ahead.
Carriers: Cincinnati pricing power will likely be shifting further in your favor with the 132 bps increase w/w in outbound tender rejections, coupled with the 31% increase in outbound tender volumes. Keep an eye on outbound tender rejections, and if they start to climb further w/w, adjust your pricing to reflect the likely tightening of capacity.
Shippers: Your shipper cohorts in Cincinnati are currently averaging 3 days in tender lead times, but with outbound volumes and the Headhaul Index on the rise, it would be wise to push your tender lead times closer to 4 days through the next couple of weeks to ensure you are able to secure capacity if the market tightens further.
